Two Reports on Healthcare Reform, One Positive, One Negative

Two recent pieces on health care reform; one positive, one negative. Both see potential; one positive, one negative.

The report from the Commonwealth Fund states 90% of American families living above the federal poverty level will be able to afford health insurance under the Affordable Care Act.

The commentary appearing in the April 27 issue of the Journal of the American Medical Association, warns that formation of Accountable Care Organizations (ACOs) by hospitals and physician practices under provisions of the new health-care law could potentially be designed to exclude minorities and widen disparities in health care. ACOs are meant to provide care-coordination and hold down costs.

Jonathan Gruber and Ian Perry of the Massachusetts Institute of Technology (MIT) who wrote the Commonwealth Fund report, found that new subsidies available through health insurance exchanges established under the law will make premiums affordable for most families.

The Commonwealth report used consumer spending data to analyze family budgets across income levels, and compared them to the costs of purchasing health insurance through the health insurance exchanges scheduled to begin in 2014, and typical out-of-pocket health care spending.

The analysis found that the vast majority of American families, including lower-income families, have room in their budgets for premiums and typical out-of-pocket costs.

The report gives this example: households between 100% and 150% of the poverty level (up to $33,525 for a family of four) spend 75% of resources on necessities—including child care, food, housing, taxes and transportation—leaving most families in that income range able to afford some health-related expenses.

I wonder how these percentages have changed in recent weeks with the increase in gas prices. Does this hold up?

Gruber and Perry did note that in each income range examined, some families would still struggle to afford all their health care because of high out-of-pocket costs. For example, 10.8% to 17.5% of families with incomes between 100% and 200% of poverty, and about a quarter of families earning between 200%and 300% of poverty, who have high out-of-pocket costs could not afford all their necessities plus health-related costs. Families with incomes over 500% of poverty, or $111,750 for a family of four, have room in their budgets for health care, even with high out-of-pocket costs.

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"The Affordable Care Act is very good news for millions of Americans who are struggling to afford health care, going without health insurance, or skipping the care they need because they can't afford it," said Commonwealth Fund President Karen Davis. "The new law makes health insurance and health care affordable for nearly all families, and introduces delivery system reforms that have the potential to greatly improve quality and efficiency. If implemented well, new entities like accountable care organizations may bring even greater savings and affordability than this report predicts."

"Our analysis is promising, as the vast majority of people will be better off because of the premium subsidies and cost-sharing limits in the Affordable Care Act," said Jonathan Gruber, professor of economics at MIT and lead report author. "However, the concerns about high out-of-pocket costs are notable and should be addressed so that people who become very sick don't face out-of-pocket costs that they are unable to afford."

While the Commonwealth report is positive in regards to more families being able to afford health insurance, Craig Pollack, M.D., M.H.S., assistant professor of medicine at Johns Hopkins, and his co-author, Katrina Armstrong, M.D., from the University of Pennsylvania warn that as a result of new provisions in the Patient Protection and Affordable Care Act, wealthy hospitals and practices may "cherry-pick" similar, wealthy institutions and groups to form ACOs, and avoid poor and minority-heavy patient populations treated elsewhere in order to lower costs and raise quality of care.

ACOs are designed to encourage patients to seek care within their own network, further accentuating the disparities between networks.

In practical terms, writes Craig Pollack, M.D., M.H.S., assistant professor of medicine at Johns Hopkins, hospitals and physician practices that treat a disproportionate share of minorities may be unable to join ACOs and fall further behind in the cost and quality of care benefits likely to occur in such networks.

"There is ample evidence of racial and ethnic disparities in health care," says Pollack. "Hospitals and private practices that care for greater numbers of minorities tend to have larger populations of Medicaid and uninsured patients. These patients have less access to specialists, and their hospitals and practices tend to have fewer institutional resources than their counterparts."

"There is wide difference in the ability of hospitals and practices to implement the cost and quality measures needed to form ACOs," adds Pollack, who cites financial resources, management structure, and size as barriers to forming such networks. Under the law, ACOs must be able to provide all levels of care for at least 5,000 Medicare beneficiaries.

Pollack says ACOs could improve coordination of care across private practices and hospitals by encouraging hospitals and doctors to work more closely together on inpatient and outpatient care. Cancer care, for example, could be enhanced with "patient navigators" who coordinate services, he says. He notes that the potential benefits of ACOs have yet to be monitored and evaluated by the Centers for Medicaid and Medicare, and will be an important component to wider adoption of ACOs.

To monitor the impact of ACOs on health-care disparities, Pollack and his co-author, Katrina Armstrong, M.D., from the University of Pennsylvania, suggest measures to evaluate the process of creating ACOs from an antitrust/market consolidation perspective. Measures of quality should include details of the patient population by race and ethnicity within individual ACOs; across separate ACOs; and compared with patients not in ACOs.